Astral Foods sees 26% jump in full-year revenue

Astral Foods, South Africa's largest integrated poultry producer, has reported a remarkable increase in full-year profits, more than doubling its earnings driven by higher poultry sales and selling prices. The company announced that its half-year headline earnings per share soared by an impressive 138%, leading to a substantial rise in its interim dividend to R7.90 from R3 compared to the previous year. CEO, Chris Schutte, joined CNBC Africa to shed light on the financial numbers and discuss the key drivers behind the outstanding performance in the poultry division. Schutte highlighted that the significant jump in profits was mainly attributed to the poultry division, which witnessed a surge in operating profit by 627%. He pointed out that the increase in profitability was primarily fueled by higher volumes, expansion in their Willy Fonds farm, product mix improvements, and strategic price adjustments to counter rising input costs. The CEO acknowledged that the comparison was against a period affected heavily by the COVID-19 pandemic and lockdown restrictions, contributing to the impressive growth in the poultry segment. The CEO emphasized that poultry remains a preferred protein source for consumers due to its value proposition. He noted that while there may have been some substitution among meat protein products, poultry continues to be the favored choice among consumers. Schutte attributed the higher sales volumes to market share gains, product mix enhancements, and favorable production increases at their plants. Addressing the inflationary pressures impacting the industry, Schutte highlighted the challenges posed by escalating input costs such as maize prices, higher oil prices, and increased electricity costs. He emphasized the importance of implementing effective cost management strategies to sustain the business and ensure the viability of operations. Schutte mentioned that passing on cost increases to customers is essential for the long-term sustainability of the business, as absorbing such expenses could jeopardize profitability and ultimately impact consumers. Regarding the issue of imports in the poultry market, Schutte clarified that imports still account for approximately 24% of poultry products consumed in South Africa. He mentioned that while import volumes had seen a decline, it was not solely attributed to anti-dumping tariffs but also influenced by challenges in distribution and rising input costs globally. Schutte addressed concerns raised by importers regarding pricing from local producers, asserting that the industry's focus should not solely be on margins but on sustainable business practices. Schutte discussed the company's strategic operations in Africa, highlighting the positive performance in Namibia while announcing the decision to exit Swaziland and Mozambique to reallocate resources to focus on expanding in Zambia. Despite challenges in the supply chain, Schutte expressed confidence in Zambia's stable economy and favorable business environment, signaling the company's optimism for growth in the region. In conclusion, Astral Foods' exceptional financial results underscore its resilience and strategic acumen in navigating the volatile market conditions. The company's focus on driving growth in the poultry division, implementing cost-efficient measures, and expanding into promising markets position it for continued success in the competitive food industry.